Rising Price of Imported Coal Sparks India’s Biggest Electricity Crisis

By Anil Sharma
Anil Sharma
Anil Sharma
October 21, 2021 Updated: October 21, 2021

India, the second-most populous country in the world, is facing an unprecedented electricity crisis due to a shortage of coal, which is disrupting the production of its thermal power plants.

India’s coal-fired thermal power plants account for nearly 54 percent of the country’s electricity generation capacity.

The disruptions have caused some states to resort to limited daily power cuts. Others are on the verge of announcing them.

Out of India’s 135 power plants dependent on coal for electricity, more than 60 percent are reported to be in some form of crisis.

Epoch Times Photo
An Indian villager holds coal chunks in Uncha Amipur village, near the National Thermal Power Corp. coal plant in Dadri, India, on Dec. 7, 2017. (MONEY SHARMA/AFP via Getty Images)

Some of these power plants, as per media reports, presently have a stock of coal to last four days, well short of the federal recommendation of at least two weeks.

On Oct. 10, Indian Minister of Power and New and Renewable Energy R.K. Singh reviewed the coal-stock position in all thermal power plants.

A government statement on Oct. 9 said the total amount of coal from all sources totaled 1.92 million tons, while consumption was 1.87 million tons, indicating a shift toward a gradual building up of coal stock.

“Ministry of Coal and Coal India have assured that there is ample coal available in the country to meet the demand of power plants,” the statement reads.

Epoch Times Photo
The Wanakbori thermal power plant at Wanakbori village in India, on Oct. 15, 2015. (SAM PANTHAKY/AFP via Getty Images)

“Any fear of disruption in the power supply is entirely misplaced. The coal stock at the power plant is sufficient for more than 4 days’ requirement and as the coal supply is being ramped up by Coal India Limited, the coal stock at the power plant would gradually improve.”

However, the situation on the ground looks different, as power cuts in some of the cities and industrial areas have been reported. Recently, Singh hinted that the coal supply may remain “uncomfortable” for another few months.

The main reasons behind the coal shortage, economists say, are heavy rains in August and September, a rise in power demand due to economic recovery after the second wave of the CCP virus, and an increase in prices of imported coal.

The CCP (Chinese Communist Party) virus is the pathogen that causes COVID-19.

Epoch Times Photo
A Chinese laborer loads coal into a furnace as smoke and steam rise from an unauthorized steel factory in Inner Mongolia, China, on Nov. 3, 2016. (Kevin Frayer/Getty Images)

As stated in an Economic Times report, India’s power consumption grew by 3.35 percent in the first half of October to 57.22 billion units (BU). During the same period last year, power consumption stood at 55.36 BU, which was higher than the 49.66 BU in the same period a year before.

Despite having the fourth-largest coal reserve in the world, India is the second-largest importer of coal. On average, the country imports 20 percent of its coal needs, and a steep rise in international prices has led to declining imports, hitting the supply of coal to thermal power plants.

“Due to rains, there was a coal shortage, causing an increase in international prices—from [80 cents] per ton to [$2.40] per ton. Subsequently, imported coal-power plants are either shut for 15 to 20 days or are producing very less. This puts pressure on domestic coal,” coal minister Pralhad Joshi said, according to Indian news agency ANI.

The crisis provides an opportunity for India to fast-track reforms, including measures to improve the financials of electricity distribution companies and to boost renewable energy such as solar, wind, and biofuels.

Anil Swarup, a retired civil servant and former government secretary, stressed the need for structural reforms in an article in The Print, writing: “Coal supply is a problem. The problem was sorted out between 2014 and 2016. It will again be sorted out, but the real problem is in the power sector. The enormity of the situation needs to be recognized now and correctives put in place and pursued.

“If one looks at the power sector, it reveals that the electricity distribution companies … are in extremely bad shape. Non-performing assets in power-generating companies … are mounting.”

Anil Sharma